March as a result of declines in the cost of fuel and transport.

Finance Minister Grant Gibbons welcomed the news, saying it marked "a further step in the Government's efforts to improve our Island's competitive positioning in an increasingly competitve and integrated world economy.'' But he warned that there was no room for complacency over prices, which have not increased since the end of December.

"We must recognise that despite our recent achievements, many of our customers -- both tourists and international businessmen -- still view Bermuda as too expensive,'' he said.

The annual rate of inflation -- based on a sample basket of goods -- for March dropped by 0.2 percent from February's inflation rate of 2.2 percent to match the rate of inflation reached in June, 1996.

While the annual rate fell, there was no change in prices from month to month, continuing a trend started in January.

Government said the slowdown was due largely to the overall declines in oil prices in the fuel/power sector as well as a drop in average airfare prices and gasoline prices in the transport sector.

The education, reading and recreation index fell 0.2 percent in response to lower average prices for recreational equipment, pet care supplies and magazines.

But clothing and footwear edged up 0.4 percent as new spring and summer stock were introduced.

And items like mayonnaise and produce pushed the food prices, on average, 0.1 percent higher while rent, tobacco and liquor prices increased 0.1 percent from February.

Dr. Gibbons added: "It is crucial that we continue our fight against inflation and enhance our international competitiveness. Employers, employees and businesses must recognose that wage and price increases above current levels will destroy competitiveness and ultimately send jobs off the Island.''